Case Law Details
Sandvik AB Vs ACIT (International Taxation) (ITAT Pune)
ITAT Pune held that leadership training receipts is not chargeable to tax in the light of Article 12(4)(b) of DTAA between India and Portuguese
Facts- The assessee received a sum of Rs.17,43,73,176/- named as Management Support fees pursuant to an Agreement with SAPL, its Indian entity, for rendering services in the nature of Commercial, Management, Marketing and Administrative. It was claimed that this amount was not chargeable to tax because of the Double Taxation Avoidance Agreement (DTAA) between India and Sweden read with the DTAA between India and Portuguese. AO rejected the assessee’s contention and held the amount received as fees for technical services’ (FTS) covered under India-Sweden Treaty. He also examined India-Portuguese treaty and found that the amount was also covered within the scope of its Article 12(4). The Dispute Resolution Panel (DRP) echoed the draft order. This is how, the AO made an addition of Rs.17.43 crore towards Management Support fees by taking it as fees for technical services. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.
The assessee has challenged the inclusion of Rs.1,17,61,448/- and Rs.20,46,592/- in its total income received towards Human Resources services and Leadership Seminar and Conference services provided to its Indian entity by treating it as ‘FTS’.
Conclusion- On going through the orders passed by the Tribunal for the earlier years, it turns out that the Leadership training receipt has been specifically held to be not chargeable to tax in the light of Article 12(4)(b) of the DTAA between India and Portuguese. However, we find that for the year under consideration there is some overlapping in the receipts from HR services and Leadership Training. In view of the fact that the assessee has placed on record certain additional evidence which, inter alia, is required to be examined afresh to precisely determine the nature of HR services, we consider it expedient to set aside the impugned order on the issue of Leadership training and HR services.
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